COVINGTON, Ga.—There are hundreds of stories of failed subdivisions left empty by the housing bust, where homeowners are stuck staring into vacant lots of PVC pipes and weeds.

There are very few stories where a half-finished development has been saved from ruin.

The rescue of one such development, by the city in which it is located, is being heralded as a potential solution to some of the worst mistakes of the housing crisis. The local newspaper, the Covington News, praised the project, writing that “a community has been brought back from the dead.”

That Covington, a city 35 miles east of Atlanta, did anything at all is unusual, said Ellen Dunham-Jones, an architect and urban-design professor at Georgia Tech who has a chapter on the subdivision, Walker’s Bend, in a forthcoming book, Retrofitting Sprawl.

“I really applaud them tremendously, since its pretty unusual: Cities just aren’t in the business of being developers,” she said. “In conservative districts, there’s a philosophical sense that the city as master developer smacks of socialism.”

But some residents say that the way the city intervened in this subdivision has just made life there worse—raising questions about whether or not government intervention in the housing market is a good thing, and about whether mixed-income housing can ever work.

* * *

The Walker's Bend subdivision was approved in 2003, as developers started building in Covington, a town of 13,000 in fast-growing Newton County. The development was to have 249 homes across 50 acres, a layout that would have made most urban planners cringe—big homes with attached garages smushed onto small lots, with lots of pavement and oddly-shaped yards.

Sales stalled in 2007 with only 50 homes sold and 79 built, though the roads and infrastructure had been installed for hundreds more. Developer Timber South went bankrupt, leaving eight different banks the titles to 160 empty lots and abandoned homes. A map of who owned what in Walker’s Bend at the time looks like a Monopoly board—there were lots owned by Bank of North Georgia, United Community Bank, The People’s Bank, and Enterprise Bank & Co.

Home values were in free fall. Banks started auctioning off the homes to investors, who in turn rented them out to anyone who would have them.

The crime problems started soon after that. Families who still lived in Walker's Bend were victims of daytime burglaries. Many of the homes were isolated, and residents felt unsafe coming home late at night.

In many places, the city would have shrugged and hoped that eventually, the market would come back, and the subdivision would be completed. But city planning director Randy Vinson didn’t want to wait.

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Vinson seems an anomaly in conservative Georgia—he drives a mini-Cooper, which he parks at the planning department in a sea of Ford pick-up trucks—and believes in the kind of walkable development that’s now becoming popular in many parts of the country. A compact-housing development he helped spearhead in Covington, called Clark's Grove, looks like something out of a quaint New England village—not the sprawl of Atlanta. He’s been criticized by some locals—in a letter to the local newspaper, one Covington resident called him a leader of a “den of wolves,” though the writer acknowledged that Vinson is “thought by some to be God’s answer for everything and by others as the worst thing that ever happened to Newton County.”

Vinson’s plan for Walker’s Bend was unusual—he wanted the city of Covington to spend $1 million to buy up the empty lots there. They’d create more green space and parks, and work with developers to put in some affordable housing, a senior center, and perhaps a business incubator. Rather than allow landlords who don’t screen tenants, or who fail to evict bad tenants, to run the development, the city figured it could control who owned property in a time of rampant speculation.

“We thought, we're going to have rental in here, its obvious, but we can’t let the vultures come in and pick it apart,” Vinson told me.

At the time, many cities just left similar projects to rot, said Dunham-Jones. Some didn't have the money Covington had—the city has generally had balanced budgets, even during the recession—others didn't have the expertise to get involved in buying and selling real estate. No one had any idea of how to do this type of intervention, and there was no guarantee the city would earn back any of the money it might invest in the area.

"It was a controversial idea—the city becoming master developer," Dunham-Jones said. "But I thought the planning director just did a really extraordinary job."

* * *

The city council wasn’t on board right away. There were questions about whether government should really get involved in buying and selling real estate, and in planning a neighborhood. Companies who had bought property in Walker’s Bend with plans to rent it out were angry that the city was working with other developers. Homeowners were skeptical that it would make any difference, and talk of low-income housing units made some residents nervous.

But the city council had approved the original Walker’s Bend development, and realized it had to do something to prevent it from devolving further, Vinson said. The final vote was four to two in favor of spending the money to buy the lots in the development.

“I think there was a little bit of guilt because they could see the way that it was headed, that it was kind of cheap and could end up being a dumpy place if they didn’t do something about it,” Vinson told me.

The first project completed after the city bought the lots was a rehab of eight townhomes that had fallen into disrepair. Weeds were growing out front and some of the homes had broken windows or missing appliances. The city used a HUD Neighborhood Stabilization grant to buy the properties, and partnered with Habitat for Humanity to rehab them and sell them to families for the same price they’d bought them for.

Overgrown weeds at the townhomes before
rehab (Covington Planning Department)

Some of the new homeowners included James and Heather Sorrows, and Daryl Harris, who were standing in back of their townhomes on a recent weekday, surveying the neighborhood. Sometimes, when they first moved into the development and there was empty land everywhere, the Sorrows and their neighbors would ride Go-Karts through the empty grass where houses were supposed to be.

The Sorrows paid $53,000 for their three-bedroom house, which was once marketed at twice that price. The rehabbed Habitat townhomes look like something you might find in the nicer areas of somewhere like Old Town in Alexandria, Virginia. They're all attached, but some have brick facades while others are painted pale yellow or deep blue. Each townhome has different features, including a porch or a balcony, and black shutters.

“I like it like this—with the trees,” Sorrows said, gesturing at his backyard, where fast-growing Georgia pines had sprouted up in empty lots.

But after the Habitat project, the city began planning new buildings in Walker's Bend. It sold a handful of lots to a tax-credit developer, which built 32 single-family homes that it rents out to low-income tenants. Next, the city worked with the housing authority to build a three-story apartment building with 28 units, ground-floor classroom space, and a computer lab for the county workforce-development agency, called the New Leaf Center. That apartment building is set aside for low-income residents. A 26-unit apartment building next door is just being completed for permanent, supportive housing for people with disabilities transitioning out of homelessness.

The low-income housing rentals built at Walker's Bend (Alana Semuels)

The low-income housing rentals are well-built and spacious, and on the day I visited, the neighborhood was quiet and calm. They look like single-family homes with individual driveways and dormer windows on some homes.

There's a large clubhouse for the families in the rentals to share, with eight white columns out front and large bay windows, something you probably wouldn't find in many other low-income housing developments. There's a playground with a gazebo and picnic benches, and sidewalks lead through the development, encouraging walking.

I talked to a man named Jovan Reid, who lived in one unit with his aunt, and who praised the walk-in closets and new appliances in the units. His only complaint was the lack of parking in the neighborhood.

But residents outside the low-income rentals started to complain. It’s something you might hear anywhere a low-income housing development goes up. Sorrows, like many of the other early residents, has concerns about the direction the neighborhood is going.

“When they built that, that’s pretty much when the neighborhood . . .” he paused and made a diving gesture with his hand. Packs of kids now roam the subdivision and break into cars, litter, and generally create ruckus, he said.

“It was good here 'til you get all these kids destroying everything,” Sorrows told me. Sorrows says he had no problems with crime until the low-income housing units were built.

Sorrows isn’t angry that the city built low-income homes, per se, but is unhappy that crime has increased so much since they’ve been completed.

“I’m glad they were able to put more people in homes—that’s awesome,” he said. “But they ought to be more grateful—keep their kids from vandalizing other people.”

* * *

The problems that some people have with Walker’s Bend have to do with what they were promised when they moved in, versus what it turned out to be.

Felicia Brown is one of the few original homeowners still left in the development —many have been foreclosed on or have moved out. When she bought her home in 2008, she was told the development would have a swimming pool and a playground. Instead, her home was surrounded by empty lots, which soon grew shrubs and trees. The crime started when investors snapped up the homes and began renting them. Brown’s car got robbed. The lights she put out to illuminate her walk kept getting broken. Her tires were slashed and when her neighbor across the street moved out, a victim of foreclosure, a bunch of kids started breaking in and stealing appliances.

"After four or five years, it started getting bad—it was a different environment,” she said. "It seems like they let in anybody."

Brown, who works for a trucking company, has a son in college. Her home value is so low that she knows she won’t be able to sell it anytime soon, so she’s forced to stay in the development. But sometimes, she doesn’t feel safe.

Unlike other residents I talked to, Brown doesn’t fault the city for building low-income housing in what was supposed to be her perfect suburb. Being surrounded by bushes was no good, either, she said—every day, she’d come home from work and wonder if someone was hiding in the weeds.

But the crime has made her worry, she said.

“I’m really not happy with the stuff that’s been going on lately,” she said.

Ginny Elliot is another resident who has been noticing changes in Walker’s Bend. She and her husband moved in to a single-family home as renters in early 2012, after they lost their home. They live across from a park, created by the city out of empty lots that were supposed to have been houses, but Elliot says the neighborhood kids trash it. Their next-door neighbor was, for a time, a drug dealer, until she got arrested and moved out, she said. Elliot's bike was stolen from her front porch, as was her cordless phone. Her husband recently purchased a rugthat sits on the couple’s front walkway that says, “Warning: There is Nothing Here Worth Dying For,” with a picture of a hand holding a gun.

Ginny Elliot at her home (Alana Semuels)

“It looks like Mayberry here, so people come, but they’re looking for an escape, rather than for a place to plant themselves,” she said.

Elliot and her husband had been considering buying their home from their landlords, who are putting it up for sale soon. But recent developments made them question whether the neighborhood is a place they want to continue to live, she said.

Other residents were unhappy about the recently completed apartments in the New Leaf Center because they look like a typical three-story, brick apartment building and aren't the single-family homes that were originally planned. People who live in homes next to the apartment building feel that they are being peered on from above by the tenants on the second and third floors. They also complain about the portable toilets and construction equipment resting in the field where the senior center might someday be.

* * *

I was initially surprised at the negative reaction I got from many of the families in the neighborhood about the building the city had helped facilitate. After all, urban planners hold up Walker’s Bend as an example of planning that worked. And weren’t the new buildings better than vacant lots, no matter who lived there?

John Collins, the owner of Potemkin Development, which built the affordable-housing units, said he wasn’t surprised that residents were grumbling. Walker’s Bend was the first time his company had built low-income units in a failed subdivision, he said. But residents are usually not happy when a low-income development is approved in their neighborhood.

“The haves complain about the have-nots moving in next to them,” he told me. “It goes with the territory.”

The alternative to low-income housing would have been worse, he said.

“Do you really want a PVC farm in there—nothing but open homes and weeds?” he said, referring to the ubiquitous coils of orange pipe often found in failed subdivisions that have infrastructure like roads and electricity but no homes.

Some academics have recently raised doubts about whether mixed-income housing can really work to economically integrate neighborhoods. A paper published last year found that the idea that lower-income residents would find connections by living near middle-class homeowners does not always play out.

“Disputes around whether residents should have the right to occupy public space are raced, gendered, and classed,” wrote the authors, James C. Fraser, Robert J. Chaskin, and Joshua Theodore Bazuin. “For example, studies find that market-rate residents tend to identify young African-American men as a threat simply because they are exerting a right to convene and converse in public space.”

These tensions are exactly the type I heard about from middle-income homeowners—both black and white—in Walker’s Bend.

* * *

Vinson, the city planner, defends the low-income units that were built, arguing that because of the way the income limits are controlled, 75 percent of residents of Covington could qualify to live in the homes built with Neighborhood Stabilization funds (some of the homes must go to low-income families, the rest can go to families earning up to 120 percent of area-median income).

“If you look at the folks coming and going from brick bungalows or New Leaf Center, they don’t look any different or act any different from any other resident in that neighborhood,” he said.

Besides, the city’s plan didn’t only include low-income housing. It’s just that the other parts of the plan haven’t yet materialized. That’s because when a city steps in to save a subdivision, it has to depend on a host of government-funding programs that may or may not come through.

One aspect that should happen eventually is the construction of 60 units of senior housing at the entrance of the subdivision. A developer had submitted an application for a tax credit to build the housing, but did not receive it. It plans to reapply this year, which could lead to construction by mid-2016.

The last aspect, which Vinson had really hoped would tie the neighborhood together, was a plan for dozens of market-rate, single-family cottages. The homes, as designed, are lovely, with porches and the highest-energy efficiency. The city secured funding from the state to help buyers with $15,000 in downpayment assistance, found builders interested in constructing the homes, and even recruited potential buyers, who went through a 16-week home-buying program to help them manage their finances.

But home values were so low at the time that Vinson realized the potential homeowners would never be able to get a loan because the homes would cost $70,000 but be appraised at $40,000. The project was shelved until home values in the area start to rebound.

That’s part of why Vinson still sees the project as unfinished.

“I’m nervous that if it just stopped here, it would not be seen as a success,” he said.

* * *

The city will have made a profit on the development when it’s completed. It earned back the first half of its million-dollar investment from Neighborhood Stabilization money. The second half will come when it sells the land for the senior housing. But the city will still own 45 lots, which it estimates it can sell eventually, earning a total profit on the project of $500,000 or so.

But even without the financials, Vinson does believe that the city is better off for stepping in to save Walker’s Bend.

“We hand-selected our landlords,” he told me. “There are landlords out there that could definitely bring down the value of the neighborhood because of the way they handle things—we found landlords who run very tight programs.”

Dunham-Jones, the architecture professor, says it’s too soon to make any final pronouncement on Walker’s Bend. Residents need to wait until the market picks up so that builders are willing to build market-rate, single-family homes to make the neighborhood more mixed-income.

“I do think that the concerns that its just going to become this ghetto of subdivised housing are legitimate concerns,” she said. “But the structure is in place to allow the market to play itself out—it's certainly too soon to really tell.”

A two-bedroom home in Covington could now sell for about $85,400, according to Zillow, still 26 percent down from the peak in 2008. But it’s up 50 percent from a low less than two years ago. What’s more, Covington home values generally are helped by the development, and by fewer foreclosed lots on the books, Dunham-Jones said.

“It just depends on how you are defining success,” she said. “Are you judging success according to the homeowner who bought a house in a subdivision that sadly, went bankrupt, or are you judging it on a community finding ways to meet the needs of your low-income residents?”

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